Rudd blames resources lobby, Gillard for mining tax flop

Kevin Rudd creates a missing tooth in his portrait by Alex Christie when he visited Langwarrin Park Primary School in Melbourne.
Photo: Andrew Meares

by
Phillip Coorey | Chief political correspondent

Prime Minister
Kevin Rudd
has taken a swipe at
Rio Tinto
and his predecessor,
Julia Gillard
, after it emerged the mining tax made no money last financial year and was likely to make very little or nothing this year, posing problems for Labor’s bottom line.

At the same time, Opposition Leader
Tony Abbott
differed from shadow treasurer
Joe Hockey
’s criticisms of Treasury’s economic forecasts, saying they were the “best estimate going’’. But he stopped short of committing the Coalition to use the numbers to try to forecast when the budget would return to surplus if he were elected.

The Prime Minister distanced himself from the failure of the minerals resource rent tax (MRRT) to make money, saying that was the fault of the $20 million advertising campaign that Rio and others ran against his ­original resource super profits tax and the ­subsequent watering down of the tax by Ms Gillard and former treasurer
Wayne Swan
.

“Rio embarked on a wholesale campaign to destroy the early mining tax, and the result was the MRRT. Others will draw their own conclusions from that period of history," Mr Rudd said.

“I’m dealing now with the realities we are now presented with and the Treasury estimates are the best advice to the government. On the MRRT, you know what my original position was, you know what it was amended to.’’

Mr Rudd said he had no intention of amending the tax.

Figures ‘out of date’

In reporting its half-yearly profits on Thursday, Rio revealed the mining tax that it had paid the government last financial year would be refunded.

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Rio had paid less than $100 million as its first quarterly instalment, based on estimates of production and prices, but those estimates proved to be optimistic, and the company was advised by the Australian Taxation Office it was entitled to a refund. The government budgeted to receive just $200 million from the MRRT last year, of which it admitted to collecting just $126 million.

It is understood the entire amount would have to be refunded.

The economic statement released on Friday forecast the MRRT to make $4 billion over the four-year forward estimates but Shadow Minister for Financial Services
Mathias Cormann
said that figure could not be trusted.

“This casts massive doubt over Labor’s economic statement released less than a week ago, because the revenue figures in it are clearly already out of date – again,’’ Senator Cormann said.

“The MRRT was always a bad, ill-thought out tax from an incompetent and dysfunctional government.’’

Mr Hockey has said the Coalition would detail the net fiscal impact of its spending and savings policies before the election but it did not trust Treasury’s surplus and deficit forecasts, which will be updated on Tuesday in the pre-election fiscal outlook (PEFO). Consequently, the Coalition would not give forecasts of any deficits or surpluses as a result of its policies.

Abbott’s PEFO plans

On Friday, Mr Abbott did an about-face on Treasury, saying PEFO would be “the best estimate going’’.

“Hopefully, it will be more accurate than previous figures that we’ve had and we’ll obviously be working off PEFO figures,’’ he said.

“I want to make it crystal clear. The budget bottom line will be there for everyone to see. The government’s budget bottom line, the Coalition’s bottom line, and it will be better under us than the Labor Party," Mr Abbott said.

“All of our policies will be costed and funded, and you will be able to see the net outcome in good time before the election.’’

Mr Abbott’s office later rejected suggestions the Coalition will publish bottom-line estimates before the campaign. Mr Rudd said there would be no excuse for the Coalition not to be upfront with the people after PEFO was released on Tuesday.